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Contracts - Liability Allocation (2). Singh v. Persaud
In Singh v. Persaud (Ont CA, 2026) the Ontario Court of Appeal dismissed an appeal, here brought against an order vesting title to real estate in the respondent.
The court interprets a contractual disclaimer of liability ('exculpatory' clause), here in a trust deed:[36] The appellant places heavy reliance on what she refers to as an exculpatory clause in the Statutory Declaration. It provides that the appellant, as trustee, is indemnified and saved harmless by “the beneficial owner” (the respondent) from “all claims, charges, encumbrances, obligations, responsibilities, acts or omissions during the entire period of time that the land was or will be vested in the said trustee”.
[37] The respondent submits that the intention of the parties reflected by the clear language of the provision was to protect the appellant, as a bare trustee, from claims brought by third parties. I agree.
[38] In any event, I reject the appellant’s submission that this provision ought properly to be interpreted so broadly as to have the effect of barring the claim of the respondent for title to the property.
[39] When interpreting a contract, the court should follow a practical, common sense approach focused on the contractual intent of the parties: Sattva, at para. 47; and Seelster Farms et al v. Her Majesty the Queen and OLG, 2020 ONSC 4013, at para. 163.
[40] The court’s overriding concern is to determine “the intent of the parties and the scope of their understanding”: Sattva, at para. 47, citing Jesuit Fathers of Upper Canada v. Guardian Insurance Co. of Canada, 2006 SCC 21, [2006] 1 S.C.R. 744, at para. 27.
[41] The court does this by “read[ing] the contract as a whole, giving the words used their ordinary and grammatical meaning, consistent with the surrounding circumstances known to the parties at the time of formation of the contract:” Sattva, at para. 47.
[42] Applying these principles of contractual interpretation, the so-called exculpatory clause cannot be read as an agreement between the parties that the appellant could simply ignore the Acknowledgement of Trust and take beneficial ownership of the property for herself while barring any claim by the respondent. That would be an absurd result. . Shiralian v. Wyldewood Creek Inc.
In Shiralian v. Wyldewood Creek Inc. (Ont CA, 2026) the Ontario Court of Appeal considered a contractual clause limitating liability:[10] In rejecting the appellants’ argument, repeated on appeal, that it would be unconscionable to enforce the limitation of liability clause, the application judge properly referenced, in para. 46 of his reasons, the relevant three-step approach regarding the enforceability of exclusion clauses from Tercon Contractors Ltd. v. British Columbia (Transportation and Highways), 2010 SCC 4, [2010] 1 S.C.R. 69:The first step is to determine whether as a matter of interpretation, the exclusion c[l]ause applies. I have no hesitation in concluding that the clause as drafted does apply to the circumstances of this case. Second, if the exclusion clause applies, the second step is to determine whether it was unconscionable at the time the agreement was made. Third, if the exclusion clause applies and it was not unconscionable, then the third step is to determine whether the court should refuse to enforce the clause because of the presence of an overriding public policy. [11] The application judge then followed, correctly in our view, the conclusion endorsed by this court in Ritchie v. Castlepoint Greybrook Sterling Inc., 2021 ONCA 214, 27 R.P.R. (6th) 256, at paras. 3-4, leave to appeal refused, [2021] S.C.C.A. No. 153, that the limitation on the respondent’s liability is not unconscionable nor inconsistent with any of the provisions in the Tarion Addendum or the public policy underlying those provisions and that the parties were free to allocate risk and limit liability.
[12] We agree that the limitation of liability clause here takes away none of the protections under the Tarion Addendum but merely fixes, by agreement, the consequences of any default by the respondent in accordance with the parties’ freedom of contract. We do not accept the appellants’ argument that the enforcement of this clause will destroy the protection of the Tarion Addendum for every new condominium and house purchase in Ontario. The Tercon analysis serves as an effective safeguard against any abuse of such a clause or any other conduct contrary to public policy, as its application to determine enforceability requires a fact-driven consideration of the particular circumstances of each case.
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